The return to Kuwait follows the February announcement by the Central Bank of Kuwait that HSBC would be the third foreign bank to be granted a universal banking licence (MEED 18:2:05).

Moves to complete the network follow HSBC's advisory role on the acquisition at the end of March by Dubai International Capitalof The Tussauds Groupof the UK. 'This is a seminal development,' says Hussain. 'The launch of Dubai International Capital as a private equity house and the conclusion of the DaimlerChryslerdeal [announced in January 2005] and the Tussauds transaction are a very good sign of the development taking place here.'

'Our experience with the Tussauds deal was very positive. The client was able to respond to an opportunity that HSBC had identified. Its ability to respond to the transaction was professional and efficient and it reflected very well on DIC internationally. It sends a strong, positive signal.'

With about 100 people operating within its corporate and institutional division in the region, HSBC is well placed to capitalise on unprecedented developments in the GCC capital markets. 'There is an exciting flow of IPO [initial public offering] activity in Saudi Arabia and elsewhere in the GCC,' says Hussain. 'We believe that Saudi Arabia is an extremely important market in the GCC. Our office there will give scale to our coverage. It will allow us to service our clients in the kingdom a lot better. It will provide evidence of our commitment to the market and it allows us to make a difference.'

The new investment bank in Riyadh will be a joint venture with Saudi British Bank, the Riyadh-based HSBC affiliate. Tim Gray has been nominated to be its managing director. Hussain hopes that the Capital Markets Authority will issue the licence by the middle of 2005.

Hussain has some concerns about the overall market, however. 'One of the issues is the inflation of asset prices, which are being driven by the paucity of investment opportunities elsewhere, not necessarily by the fundamentals,' he says. 'There is a risk of markets overheating and investors suffering accordingly. But we are encouraged that markets are developing well. I am optimistic over a five-year period that the fundamentals of the market will sustain present trends.'